SERVICE CHARGE IN THAILAND : TOP HOTELS, September 2024

Service Charge Levels Stable Across Phuket Hotels

The Phuket Hotels Association forecasts that average income from service charges across Phuket hotels will remain stable and high during the upcoming peak season, while room rates are expected to continue climbing.

According to Bjorn Courage, president of the association, the hospitality sector in Phuket has fully recovered its workforce post-pandemic, with data from 95 member hotels. Traditionally, service charges accounted for 10% of paid room nights and were distributed monthly to all staff.

With increased post-pandemic hiring to meet strong tourism demand, individual service charge earnings are now lower than last year’s high season when some hotels saw record-high monthly service charge levels. Courage noted that occupancy rates are likely to remain steady, at around 70-80%, similar to 2023.

Room rates are expected to keep rising due to high demand, inflation, and growing operational costs such as utilities and wages. However, income from service charges in Phuket is projected to be higher than in slower-recovering markets like Hua Hin or Chiang Mai, though possibly lower than Bangkok or Samui, which benefit from a strong business traveler base and luxury properties, respectively.

Courage mentioned that while staffing levels remain conservative, productivity expectations for employees are high, with many hotels also partnering with schools to bring in student trainees.

According to STR data, Phuket hotels have seen a 30% year-on-year increase in bookings for the next six months. Additionally, Thailand’s visa-free policy has attracted more foreign tourists, particularly from China, India, Europe, and Russia.

With growing diversity in its tourism demographics, Phuket no longer solely depends on Chinese and Russian visitors as it did before the pandemic. Further boosting the market, Saudia Airlines recently announced new direct flights from Riyadh and Jeddah to Phuket, beginning in December.

In sustainability efforts, the Phuket Hotels Association, along with C9 Hotelworks, Greenview, and other partners, hosted the 2024 Phuket Hotels for Islands Sustaining Tourism event. The event aimed to foster sustainability among hoteliers across Asia and will produce a white paper on sustainability and development for government consideration in the coming months.